Industry leaders are keeping a close eye on developments related to the tariff war, though not to the extent of fundamentally altering their business practices.

This is according to interviews with several respondents to a survey conducted by the Insurance Journal Publishing Group on the subject, the results of which were published earlier this autumn on the Insurance Portal website. The survey revealed that 40% of industry leaders describe their level of concern as either “significant” (36%) or “extreme” (4%).

For instance, Hugo Fortin, President and Chief Operating Officer of iA Auto and Home Insurance, is carefully tracking the replacement costs for parts and materials in the home insurance sector, though he has yet to observe any inflationary trend—at least, not for the time being.

“Ever since the tariff war became a topic of discussion, we have been concerned about potential price hikes in these areas,” he explains. “We saw this during the pandemic: there were shortages of parts and a rise in the value of used vehicles, which in turn drove up repair and replacement costs. Meanwhile, the price of construction materials skyrocketed.” Nothing of the sort is happening at the moment.

He does, however, acknowledge that the Consumer Price Index has risen. For the time being, however, the inflation affecting consumers has not—in his experience—impacted the industry, with the possible exception of fuel costs.

Has he changed his management methods? No. But he suspects that changes have occurred elsewhere in the supply chain, though he cannot confirm this.

Monitoring mode

Elizabeth Diotte, Senior Vice President, Professional and Financial Solutions at Tokio Marine Canada, says her company is keeping a very close eye on the potential impact of tariffs its business in the professional and financial sectors. She says that tariffs will inevitably affect pricing, revenue, margins, and liability throughout supply chains. So, the insurer is observing how directors are responding.

Among its offerings, Tokio Marine Canada provides professional liability (errors and omissions, or E&O) and directors and officers (D&O) liability coverage.

Diotte says the company has not scaled back its activity or risk appetite and that it is not alarmed by the current climate. She adds that not everyone is affected in the same way. Manufacturers are more exposed than professional service firms. She says the insurer has a few manufacturing clients with operations on both sides of the border, but the impact is not significant.

She does, however, observe a diversification of client bases—driven by the pursuit of new markets, a goal championed by elected officials in Ottawa and Quebec—which is reflected in the financial statements of these corporate clients. How quickly is this diversification taking place, and does it pose a risk to their directors and officers? That depends on where they—and their clients—are based, she explains.

Diotte notes that business is excellent, despite the current environment. The insurer—which, despite its name, does not offer marine insurance—conducts business through brokers and managing general agents. Consequently, it does not interact directly with the insured businesses. However, brokers have shared with the insurer that the situation is difficult for some clients, she adds.

Dealing with uncertainty

Clients are experiencing uncertainty regarding the cost of living. Many are hesitant to spend their money, even when it comes to protecting their assets, says Jason (Jay) McMahon, President and Chief Operating Officer of Specialty Life Insurance, a company that specializes in distributing life insurance policies that do not require a medical exam.

He notes that clients are primarily focused on obtaining minimal coverage. Over the past year, they have been more hesitant than usual, as they are worried about the economy. His clients, he says, aren't wealthy; they are middle class. Many are older and are having to cope with financial insecurity, he adds.

In this environment, advisors must be empathetic, as their clients are struggling to manage rising bills while feeling a sense of responsibility for their families' well-being.

McMahon believes that consumers remain interested in life insurance, but the prevailing sense of uncertainty has shifted the nature of their conversations with advisors. It’s more of a discussion than a confrontation, he observes. The firm has 115 salaried advisors—and without changing their methods of doing business, they emphasize best practices.

He continues to work with American providers, as there are no Canadian alternatives in certain areas. And what about the future? He says in two years, there will be a change in the U.S. presidency and he remains optimistic.

"We are an independent firm, and we maintain close relationships with our clients," says Marie-Pierre Fortin, President and General Manager at BC Assur, a property and casualty insurance brokerage. "In the personal insurance segment, things have slowed down. We are supporting households—especially those facing financial instability—as they navigate these challenges."

A sluggish market cycle

In commercial insurance, the reality is different. The difficult economic climate is driving clients to seek better pricing and terms.

Fortin’s firm is based in Quebec’s Saguenay–Lac-Saint-Jean region, which is seeing billions of dollars in investments—though this is materializing slowly. "We assist entrepreneurs with their projects, and we are beginning to see the positive effects," she adds. "Some of our clients are involved in multi-million-dollar construction projects, and we support them through their growth. The overall situation is quite positive, even though certain industrial sectors—most notably aluminum, which is a major industry for us—are being affected by tariff wars."

With several construction projects underway, there is a growing demand for services related to mechanics, upkeep, and maintenance. In these sectors, the impact of the tariff war on entrepreneurs is less pronounced.

"We are currently in a downward cycle for commercial insurance," Fortin adds. "We are passing those savings on to our clients. We have a good amount of flexibility to support entrepreneurs affected by the crisis. But we’re a resilient bunch here in the Saguenay—we don’t give up easily!"

She is keeping a closer eye on surety bond files related to construction projects. She checks in with her clients more frequently, has increased the number of quotes provided, and is monitoring the "pipeline" of contracts very closely.

"We’re trying to gain a better understanding of our clients' ecosystems and how they envision the future of their businesses. Let’s just say that information flows between us much faster than it used to," she says.

Buying local

Does she prioritize purchasing from provincial or Canadian sources? Five years ago, the firm created a directory of its suppliers for its employees. This practice—encouraging entrepreneurs from the local area—has become deeply embedded in the company’s core values. "As a business leader, I’m sometimes willing to pay a premium because I get better-quality service and the benefit of proximity," she explains. "Our first instinct is to ask ourselves: do we have a client who offers the product or service we need? We have to support and encourage one another."

This same sentiment is shared by Nancy Raymond, President of Steamatic Canada, a company specializing in post-disaster restoration. "As a business owner, I’m mindful of the impacts on our own supply chain. I’m also concerned about the cost of groceries for our employees…We want them to be able to make a decent living, and we compensate them accordingly," she notes.

She adds that the "tariff war" is a concern for all business owners.

"We would like to see more solidarity within our industry – more support from those who commission the work—clients, strategic partners, and insurers—to prioritize Canadian companies over American-owned players," she says. “We need to keep the money in our country. Our Prime Minister keeps saying we should 'buy Canadian.' That message needs to reach both the provincial and federal governments. They should provide incentives to major clients and for public-sector contracts to encourage this."

Nancy Raymond suggests that the entire supply chain in the insurance industry should source exclusively from Canada, even when certain American products or services might be cheaper. "In our field, we work with price lists agreed upon by clients, insurers, and claims adjusters. If an insurer confirms that a set percentage of their claims will be handled by Canadian providers, I gain greater predictability. I can then refine my company’s growth plan and move forward with hiring. I need to feel that my partner cares about the Canadian economy."

She adds that, collectively, we must rebalance the shifting the balance of power in favor of Canadian businesses, so that we never have to go through such a crisis again.

Is this a concern within the insurance industry? It certainly is. Especially in an inflationary environment, which affects the industry’s entire supply chain. Prioritizing Canadian suppliers would make a world of difference. "But we are still forced to source 25% of our products from China or the United States. And most post-disaster restoration franchises are American-owned. Draw your own conclusions."

A matter of perception

"In the current climate, our job is quite simple: we must help manage our clients' perceptions of the market," says Nicolas Dame, president of ND Groupe financier, a firm specializing in personal insurance and wealth management. "The trade war creates a lot of media noise, but it shouldn't paralyze investors. Some of my clients reach out in a panic, wanting to sell everything. I have to explain how markets work and advise them to stay the course. I need to alleviate their fears, because their portfolios are actually performing well under the current circumstances."

A financial security advisor must demonstrate to clients that they can help them go further—a role Dame considers fundamental. "Older clients want security, so we adjust their portfolios accordingly," he explains. "Others are looking for opportunities to invest more—especially younger clients, who have time on their side."

Could the tariff crisis actually be an opportunity, given the current climate of anxiety and the state of global geopolitics? Nicolas Dame offers a nuanced perspective: when the market is struggling, that is precisely the time to invest. Yet, the stock market is delivering exceptional performance, despite wars in Ukraine and the Middle East, and inflation stemming from decisions made by the Trump administration—including the imposition of tariffs.

“As I was telling a client recently: despite all the bad news, Apple launches new phones, and people line up to buy them,” he observes. “Some sectors of the economy are doing well, while others are struggling. But in portfolio management, we always come back to diversification as a way to mitigate risk. In the current climate, this message is more relevant than ever—and it is my role to convey it.”